On April 14, before NFLX earnings we wrote an article warning for a turnaround in price.
“NFLX has played these past weeks according to our forecast, and if 0.764 extension is not tested, especially if price does not close above that level, NFLX should be headed towards the lower target (C).” – NFLX: Is it Time for a Major Turnaround?
We as a team and our equity followers had high probability not to get caught in a major reversal after earnings release and liquidated any remaining long positions.
NFLX 1H Chart – April 20, 2016
In this 1h chart, we see how prices attempted to touch the 62% retracement level, an ideal target for a B wave like that (together with the 50% retracement level). In our previous updates, we stated that it is VERY important for prices not to jump to the 76% retracement level because that would complicate our forecast.
Also, the upward channel was broken on the downside confirming our analysis.
NFLX Daily Chart – April 20, 2016
In the daily chart, we have a condensed view of the counts and target levels. Usually, C waves are fast and part of the “capitulation” phase and the main target for this wave to complete is at the 100% extension level but if the structure has 5 waves down, we need to observe how the 76% extension level would react.
Thus, we have a target price range between $60-$70 for wave C and the primary wave IV to complete. Yesterday, price closed in the “heart” of wave 3 of C and it should complete above $90. Wave 4 of C needs to retrace 23% or 38% and the NFLX buyers will capitulate towards our target box.
Note: A jump over $106 would seriously put a question to this analysis.